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How Outfit7 Built A Toy App Powerhouse

While Angry Birds grabbed headlines last year, it wasn’t the only breakout mobile app success story. Slovenian start-up Outfit7 last year managed to quietly rack up more than 60 million downloads of its Talking Friends apps, led by its breakout hit Talking Tom Cat. The company, which is now up to about 72 million downloads, has built a fast-growing empire by side-stepping the mobile gaming market and constructing a modern toy with communication at its heart.

The Talking Friends apps — there are nine of them now with the addition of Talking Gina the Giraffe over the weekend — allow users to speak and have a cartoon character say the same words. It sounds simple– and indeed there were others before Outfit7 arrived on the scene a year ago. But the company exploited the idea fully, nailed the execution and along the way vaulted to the top 10 free apps of 2010 in the Apple App Store (s aapl). The company, which runs a management and research office in Palo Alto Calif., is now up to a rate of 15 million downloads a month after launching its first app in July.

I talked with CEO Andrej Nabergoj recently about how his start-up, made up of largely search engineers and social app makers, managed to create the tamagotchi of apps. He said the key was creating a well-made novelty app that held a surprising amount of engagement. And then it came down to endowing it with tools that allowed it to become a powerful communications tool.

“We thought of this not as a game but a toy; we’re competing in the toy space and we’re taking time away from toys,” said Nabergoj. “Kids consider touch screens as toys not phones and we understand that.”

Nabegoj said it’s not just kids that enjoy the idea of a mobile toy. Adults also appreciate the idea of open-ended play with a character, something that takes them back to their childhood. The move helped Talking Tom Cat and Outfit7’s other apps appeal to a different audience than mobile gamers. But the key was making Talking Tom more than just a disposable app. Outfit7 equipped Talking Tom Cat with a variety of expressions and reactions, so users can pet him, punch him, serve him milk or get him to purr. The character becomes something of a digital doll or action figure. Though other talking character apps existed, it was this interactivity along with a focus on getting the voice syncing right that helped Talking Tom Cat rack up 40 million downloads by itself.

Another key decision was allowing users to share their creations in 45 second video clips on YouTube, (S GOOG) Facebook or by e-mail, helping it spread virally. What the company found was the Talking Friends apps were more than just toys, they were evolving into communications tools. Nabegoj said users started broadcasting messages to friends via Talking Tom Cat. Parents were sending notes to their kids with the apps. One child suffering from multiple sclerosis used the app to talk to her parents in place of her normal voice, which was normally hard to hear.

“We’ve seen these uses cases but, it’s something we never intended,” Nabegoj said. “That’s when we started to understand why people use our apps so frequently: because they’re communication tools.”

He said 20 percent of users use the apps on a weekly basis, which is a good number considering they’re more or less novelty programs. Nabergoj said there are still a lot of opportunities to use voice to broadcast messages to others. That’s something Outfit7 will continue to explore this year as it releases at least 15 new apps, covering different niches and target audiences. Upcoming apps, like the recently released Talking Gina the Giraffe, will flesh out the personas of characters with a new mood engine, include virtual goods and will offer mini-games, broadening the appeal of the apps. The formula appears to be holding up: Talking Gina recorded 1 million downloads over its first four days.

Nabegoj said Talking Tom Cat will also play an even larger role this year, becoming a character that makes appearances in other non-Outfit7 apps. Though it’s not as ambitious as Rovio’s plans for Angry Birds merchandise and movies, Nabegoj said there’s an opportunity to leverage the popularity of Talking Tom Cat and his friends.

“We will hit 100 million downloads this year,” Nabergoj said. “We already have 40 million people that are very loyal to the Talking Tom Cat brand and we want to expand that connection.”